• Two of Spain’s telcos are forming a major fibre broadband network joint venture
• FibreCo, formed by MásOrange and Vodafone Spain, already reaches 12.2 million premises across Spain
• An external investor will also be a major shareholder in the company, which is expected to generate annual EBITDA of about €480m within three years

Two of Spain’s main telcos, MásOrange and Vodafone Spain, have reached a binding agreement to form a fibre-to-the-premises (FTTP) joint venture that combines the existing fixed access network assets of the partners, which already reach 12.2 million premises across the country, about one-third of the total. 

The companies have been in talks to create the joint venture, dubbed FibreCo, for months and initially outlined their intentions in July 2024. Now they have finalised the details and expect the new company to be formed during the first half of 2025. 

It will begin life as a fully commercial operation, as the fibre broadband network operations being folded into FibreCo already provide services to more than 4.5 million customers (including Vodafone Spain customers currently serviced via a wholesale agreement with national operator Telefónica that will be transferred to FibreCo). In addition to providing services to the retail broadband customers of the two telco owners, MásOrange and Vodafone Spain will also offer wholesale FTTP services using the FibreCo network.

As initially outlined, MásOrange (which was formed as a result of the €18.6bn merger last year of Orange Spain and MásMóvil) will hold a 50% stake in the new venture, while Vodafone Spain (which is now owned by Zegona Communications following a €5bn M&A deal that was completed in May 2024) will hold a 10% stake. 

The remaining 40% will be held by an external investor, though that participant has yet to be agreed. MásOrange and Vodafone Spain have “launched a process” to bring an investor on board and “initial interest from investors is strong, reflecting the high quality and utilisation of FibreCo, its already built FTTH infrastructure and the multi-tenant nature of the company,” noted Zegona in a press release announcing the binding agreement. “As a result, we expect FibreCo to be a highly valued asset commanding a significant valuation premium,” added Zegona, which expects FibreCo to be generating annual earnings before interest, tax depreciation and amortisation (EBITDA) of €480m after three years of operations (though no forecast for revenues or profit margins was shared). The external investor is expected to be on board when the company is formed at some point during the next few months. 

“This will be the largest and most highly developed FibreCo in Europe, benefitting from having virtually all its FTTH network already built and with nearly 40% existing network utilisation,” added Zegona. 

The telco owners are keen to highlight how FibreCo aims to deploy cutting-edge fibre broadband technology – namely XGS-PON, which enables symmetric 10 Gbit/s connectivity – and operate a network that “will be a benchmark for sustainable development, meeting high ESG standards including delivering significant energy savings through more efficient use of network assets.” 

MásOrange CEO Meinrad Spenger, stated: “This new FibreCo will be a benchmark at European level due to its size, innovation and respect for the environment and will allow us to be more efficient in order to continue providing our country with the best telecommunications infrastructures.” 

And José Miguel García, CEO of Vodafone Spain, added: “We continue to take steps in our strategy to transform Vodafone Spain into a more competitive, efficient and growing company. This agreement is a relevant milestone in our plan, as it will guarantee our customers access to fibre optic networks and a better service.”

That strategy isn’t limited to this joint venture with MásOrange. In November, Vodafone Spain struck a deal with Telefónica that encompassed a renewed wholesale network access agreement and the creation of a new, €2bn FTTP company (also currently dubbed FibreCo) that will reach 3.6 million Spanish premises. Telefónica will hold a 63% stake in the company and Vodafone Spain will hold an initial 37% stake until (once again) a third-party investor is found, at which point Vodafone Spain will reduce its stakeholding. 

“The combination of these transactions with the new FibreCo with MásOrange completes the transformation of Vodafone Spain’s fixed line strategy, delivering full FTTH services nationally,” noted Zegona. 

Eamonn O’Hare, chairman and CEO of Zegona Communications, added: “Entering this FibreCo partnership with MásOrange, alongside our recently announced agreements with Telefónica, transforms Vodafone Spain’s fixed line strategy. The combination will give guaranteed access to a future-proof all fibre national network with attractive economic terms and will enable substantial cost savings across the business. Monetising these two FibreCos is expected to deliver very significant Zegona proceeds, generating the ability to reduce leverage and provide a return of capital to shareholders.”

- Ray Le Maistre, Editorial Director, TelecomTV